tv Bloomberg Markets Middle East Bloomberg October 4, 2016 12:00am-1:01am EDT
its sanctions ravaged sector today. anchor: donald trump enjoys his brilliant use of the tax code while critics say he left america holding the bill. youssef: it is 8:00 a.m. in the emirates. gie: i am in hong kong. welcome to bloomberg markets, middle east. once again, another day of gains here for asia-pacific but of course, it was a little bit of a more tepid market and you take a look at what the u.s. did. it looks like good news was bad news. youssef: for the equity markets, you could say that. a few hours of u.s. data -- u.s. and sales beat estimates then u.s. manufacturing. let me show you what is happening with interest rate expectations off the back of those numbers which came in at 51.5 versus 49.4 for the month
prior. bloomberg intelligence sing it is an indication of a mild acceleration supporting some degree of optimism that momentum would building. you can see the expectations have shifted. it has had an impact. it has boosted the odds of a hike to 61%. thate other side of conversation with the new york fed president william dudley suggesting that the central bank should because shifts in raising rates even that the limits are still in place with the rates where they are in terms of being able to have something in the toolbox when the recession does kick in. what are you watching, angie? angie: we are watching another weakyen -- another day of yen. that is on the back of that kind of perception that the central ma --and loretto
loretta mester suggests that things are in flux. mumbai has been trading for 20 minutes and we are waiting for the r.b.i. decision. the hang seng is flat. but the topix is saying another day of gains on the back of weaker yen. exporters are getting a left. east, itin the middle is just two hours away from the opening of the emirates markets. that would be at 10:00 a.m. local time. this is the picture that took place -- overall a negative one. dubai down almost 2%. the sentiment is being driven by what is happening in saudi arabia. sincearket at its lowest march 20, 2011 as a result of the regulatory changes. on the whole, the question is
how many of these companies have exposure to what is the region's largest economy. and then you have the other side of the gcc and middle east performance and that is what is happening in egypt on the back of expectations of a devaluation being imminent. stocks are soaring on the back of that. let us check in on the first world headlines around the world. ahead. auto sales came in of estimates last month suggesting the industry six-year growth spurt has something left to offer. sales were rising 4.9% on the year. analysts had forecast a 1.9% sales fall. sales have been rising 2% despite expect haitians of no change. toyota and honda both exceeded estimates. the u.k. government will not give any special forces -- special favors to -- senior figures in theresa may's
says -- the #to its lowest on monday. investors bet on an imminent devaluation of the pound. it regained two point 3%. speculations mounted over the weekend that cuts of the egyptian pound could come at any time after the central bank president spoke on saturday. to 19reign reserves rose point $6 billion in september, their highest since june of last year. the cleveland fed president says the u.s. economy is ripeor a rate hike and november remains on the agenda despite the presidential election. speaking exclusively to bloomberg, she said there are enough reasons to move next month and the election should
not get in the way and the politics will not affect the feds decision. >> i thought the case was compelling to take another step on the gradual path. comes in as we anticipate and is consistent with my forecast, then i would expect that the case would remain compelling. we will look at all of the data that comes in between now and november. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. i am rosalind chin. this is bloomberg. angie: the reserve bank of australia has kept the country's cash rate on hold. the real interest here was in what everyone has to say. we have call allen joining us now live from sydney. what did the rba have to say? paul: like so many central banks, it is all about
inflation. on that topic, the rba's at the current policy, the cash rate at 1.5% is consistent with meeting the cpi target overtime. inflation is weak. low the banks target band. but the new governor has been changing the language around inflation. a couple of weeks ago, he famously used the phrase that the rpa are not inflation nutters. swaps traders saw and analysts widely expecting the rba not to move today and they did not disappoint. they did not move. they said the policy was consistent with sustainable economic growth and jobs growth over the near term. the aussie dollar, little changed on that decision. youssef: the commonwealth bank ceo is continuing his appearance in front of australian lawmakers over banking conduct. what has he been saying?
paul: this is a politically charged inquiry. the opposition labor party once a wide ranging commission. you can imagine that some of the questions are quite pointed. the first questions related to insurance products and in particular a case in which a man suffering from rheumatoid arthritis was advised to stop taking his medication to that he would qualify for the banks 1940 definition of what arthritis was and receive a pay out. some very difficult questions along those lines. ceo apologizing again for the banks conduct. he is not making any apologies for the banks profits. the bank making strong profit. he says that is important to the future of australia. as we are speaking, we are looking at live pictures of
that testimony to lawmakers. paul allen, thank you for joining us. is also coming from the reserve bank of india today but economists a split over the outcome. we have more from mumbai. atel's firstp call as r.b.i. governor. economistsf of the expect a cut of about 25 basis points and the other half expect no change at all. food prices have come under check as well. many believe this is the right time for the r.b.i. to cut interest rates because the fed has not moved. another section please the r.b.i. should be waiting for some more data points on the inflation front. before taking a call or cutting
interest rate. as you said, this is his first meeting as governor. it is also the first time a committee has been taking a call on interest rates. will be on the commentary of the governor. his views on global macroeconomic climate. his understanding of what he is likely to do in the forex markets. remember, the governor was very interactive with the market. they want to know what the tone of the commentary will be. it is still widely speculated whether he will take a hawkish or a dovish tone. this will be the first glimpse the market will have. how does monetary policymaking change from here in india? >> it is a complete overhaul. this was so far a one-year-old
institution that the bank of -- it was rightly run by the governor. here is how it works. six people on the committee. three people on the r.b.i. including a -- including the governor and the other three are academics. in the case of a tie in a decision, the bank would make the decision. two weeks from now the minutes from the meeting will be made public so it will be interesting to understand the discussion and if there are any pressures. the monetary policy is a new concept in india. in hisng that patel earlier capacity was involved in creating as well. -- it is something that the bank has been comfortable with. we will have to watch and see the commentary which will be key
to the inflation expectations and forecasts going forward. angie: thank you. -- from mumbai. y. asian markets are looking a little mixed up. we have a couple of markets in the red. seeing a big boost by japan and south korea which are gaining ground today on weaker local currencies. the nikkei is gaining 0.8%. the kospi is up 0.6% after the holiday. rbaalked about the rpa -- cash rate decision. the afx 200 -- the asx 200 down 0.2%. washang seng index unchanged in the morning session after surging more than 1% yesterday but you have to keep
an eye on chinese stocks trading in hong kong. mainland china still on the golden week holiday but h shares are still gaining for the second consecutive session. the morning session ended with the hang seng index of 0.4%. it is worth mentioning that volatility has been increasing among h shares. we have seen swings in this index as larger than in any other index. watching ever granted. it is a chinese developer. a searched more than 9% in the morning session. urged more than 9% in the morning session because of a reorganization plan. they plan to inject assets into a chinese mainland company. youssef: still to come on the
program, we picked up the discussion on iran as it starts the process of rejuvenating its sanctions ravaged industry. later today, we take a look at how they plan to do that. next, the pace of lending and cuts -- will they increase in the run-up to the world cup? we speak to the ceo of doha bank. that is next. this is bloomberg. ♪
15% in 12 months. what has been driving that pace of lending? >> the government plays a big role. growing more than 70%. and the airport and seaport and hotels and development -- that is stimulating the service market. trade is improving. expansion in terms of aggregate terms. youssef: is that likely to continue given the amount of spending needed on infrastructure for the world cup? >> absolutely. you have a major development program initiated. and there are budget constraints. some soe trimmed down the must do projects are all on. it is driving the economic momentum in the right trend. youssef: looking at these
figures -- the flip side is that deposits have not grown by much in the same timeframe. since july.ths what are you doing to attract deposits? >> you are correct. -- thel macro terms deposit issue was deteriorating in the first quarter. that got eased a bit in the second quarter. further easing now. what has triggered this easing the borrowing, $9 billion were borrowed. the banks are also devalue waiting and aerating the banks. stimulate theto oil liquidity button. it will also balance the frame in terms of liquidity. youssef: would it make much of a difference? >> it has made a difference between the second and third
quarter. we are seeking further opportunities to see how best we can have further liquidity easing. youssef: what about doha bank -- would you consider issuing bonds? >> early next year. we need to look at the community reduced thewe have maturity mismatch. areteral borrowings happening. i plan to use my international offices and build a brand equity. saudi arabia has been the worst performer in terms of the stock market globally and it continues to be under pressure. there is a lot of doubt and skepticism about the reforms and the relationship with the u.s. and oil prices. what is your take on the health of the saudi arabia and economy? is pessimism warranted? the gdp is less than
6%. they should have borrowed when they knew they would have more than 20% budget deficit. they should have matched it with long-term borrowings. they have been pronouncing for borrowings in the last nine months. apparently, it has not been executed. it is straining the economic momentum. the banks are struggling and the economy is now in austerity measures. these are not really required. between the fiscal and monetary prudence is required there in saudi. youssef: what is the reduction in saudi oil output going to do to its revenue base? now, with the opec deal it looks like saudi will have to take the hit for most of the production cutbacks. will that be another knock? >> oil prices now after the
meeting are improving. shows that the output cut is going to stimulate further in terms of oil revenue. plan -- $50-50 five dollars. youssef: the risk is that other suppliers will step into the gap and prices will go up. we will continue our discussion this morning. still to come, how will the u.s. elections play out in the middle east? from ourear more special guest. stay tuned. this is bloomberg. ♪
with the ceo of doha bank. we were mentioning how interest rate expectations have shifted when it comes to the u.s. federal reserve. you think they will move in december? >> if you ask me, they should not. you have doubts in terms of monetary policy. the global economics are still in disarray. sustainableal stability. what has changed in the american economy? there is no sustainable growth. jobless claims have reduced but it has to be stimulated further. the growth momentum is not deserving the interest rate hike. youssef: what about asset price inflation? that is a major concern looking at the devaluations. you could argue that they should have hiked earlier in the year
when they had an opportunity. are premature.ns there are arguments but it is not really an argument to really stimulate the interest rate. i have to ask you about the upcoming u.s. election. as we have said, the fed may move in december or may move in november that according to the interview that bloomberg did with mester. she said november could be in play. what do you think the likelihood would be for that kind of decision, ahead of the u.s. election? >> they will do it for the sake of doing it because they have to --nced they have
because they have pronounced and will need a face-saving. they have to warm up to reach the balance but it will happen as they see it. position thatnal it is premature. they have to wait for the election. there are totally different policies from the different candidates. it is premature in terms of politics and economics to drive the change at this point without looking at the oil economic momentum or economic outlook and global financial stability. what do you think about possible donald trump or hillary win? does that change the lens for you? explain thisu status? it is extraordinary, isn't it?
it is very delicate for me to comment but i feel it is not in the interest of the global --nomics or global politics that a presidential candidate is out of order. you need a candidate that has consistency, an understanding of the global political framework. deficit in the understanding of mr. trump. his comments are extraordinary. it is difficult to digest especially from the gulf perspective. this is not well understood. the communication gap is there. the framework in terms of military or foreign policy -- a lot of understanding required by mr. trump to build his case. bank --eo of doha
it gained 3.2%. speculation mounted over the weekend that a cut for the egyptian pound could come at any time after the central bank governor met with the president on saturday. youssef: saudi stocks have sunk deeper in what is shaping as their worst year since the financial crisis. gainsngdoms benchmark declined more than 2% on monday extending the worst selloff in the six gulf nations. it lost about $30 billion in value since the cuts to government salaries and bonuses were announced last week. angie: the cleveland fed president says the u.s. economy is ripe for a rate hike and november remains on the agenda despite the election. mester wanted to raise rates at saysast meeting and she there are enough reasons to move next month and the election
should not get in the way. it is 12:30 a.m. in hong kong. he youssef: : this time of day we are counting you down to the european trading day. let us talk about the latest coming out of the conservative party conference. what are we learning about the financial services industry in london and its ability to power forward in trade with the rest of europe unfavorable terms after a brexit? we have learned that the british financial services will get no special favors in the brexit negotiations. people have been talking to bloomberg and the theresa may administration and they say they will refuse to prioritize the sector after the u.k. leaves the eu. they have dismissed a request by
the city for an interim deal with the eu to help ease the transition out of the block. this is being seen by some as a clear break with david cameron who put the risk at financial fires -- the risk of financial services at his heart of his argument to stay in the eu. this is adding to concerns around a hard brexit issue. theresa may does not like to see things in hard or soft. it does not change the fact that we saw the pound sink to the lowest level since july on monday thanks to speculation on how hard the brexit will be. theresa may's office did not want to comment on this. she did not refer to the city or the financial services. she simply referred broadly to the importance of getting the best trade possible in her speech on sunday. beenef: how has this playing out for u.k. assets?
anna: the pound heading the lowest since july before we got that story in bloomberg but that had been building through the week. this happened yesterday in session. hr to hear that shows you what this has been doing to the stock market here in the u.k. the pound once again put in focus. investors around the world are making at of the ftse 100. 2.3 percent in dollar terms. exporters advancing in yesterday's trading session as the pound approached the three decade low. companies get most of ei revenue from outside of the united kingdom and they row late -- and they rallied after june. but if you remove that currency halo, inc. do not look that great if you are an investor.
american-based investors account for 46% of all foreign holdings in the ftse 100. things look very different depending on which side of that trait you are on. -- trade you are on. angie: let us take -- check in on first world headlines. the foundation holds about 3% of the company and the financial director says it has a lot of potential. believe it is a very good long-term investment with good growth potential. if you dig a little deeper into what china postal savings bank is, you come to the same conclusion as those investors last summer that this is a special and unique opportunity.
-- accusingssia has washington of jeopardizing stability. president putin pulled out of the agreement signed 16 years ago saying the treaty could be restored if the u.s. removes sanctions. syrians over ukraine and have seen bilateral relations sinceo the worst level the cold war. the u.s. and the philippines have launched their latest drill. the president has said he would bring the long ending series two and build closer ties to china and russia. the decision said was not final. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. i am rosalind chin. this is bloomberg. starts thean oil
process of re-juvenile desk rejuvenating the oil industry today when they sign a new contract. iran is seen at -- as the big winner from last week's opec meeting. anthony: they did have some advances last week. one of the main things was that the main rival in the gulf, saudi arabia, conceded that iran does have a right to increase oil production now that they are coming out of sanctions. iran has been trying to regain their market share this year since tensions on the oil industry were lifted in january with the nuclear deal. they have more than doubled their crude exports. they are ramping up production. was a main point that they had to go to algeria and keep that ability to keep improving their production prospects. another gain for them is that their main rivals including
, both ofbia and iraq those countries will have limits and have to scale back some production under that algiers deal. of course, i ran is a winner as we see it right now. the deal still has to be finalized by the time opec goes to its meeting in november where they will set the individual country quotas and we will see if the deal holds and can go ahead. that is coming up at the end of november. youssef: we have heard a lot about this oil contract that iran has been working on in terms of its format and framework. today, talked as through the significance. anthony: this will be a positive step for iran. this is a contract that had been contested in the country. we are heading into elections where the current president will be running for reelection. he is staking his claim on the
benefits you can get from the nuclear deal. there was a lot of contest between those backing rouhani .nd other hardliners the fact that a contract is being signed after the oil ministry did make some improvements, and got backing for that -- the fact that that is now being signed should be a sign to investors including foreign investors that the contract is there and will work. iran wants to get foreign money into the country. the deal today will be signed with local companies. iran once to bring an international oil company in to bring foreign cash and new technology to get that next kick up in terms of production and production capacity. hurdles does iran face in getting its oil industry back on track?
anthony: they need the additional investment from foreign companies. they are back up getting close to 4 million barrels a day. that is the target that they set for themselves. looking to get up to about 3.8 in the coming months onto 4 million. in order to get beyond that, they need the new investment in new technology to really bring on some of their older fields, increase production there and increase the well pressure in the older fields that have declined with natural age. it is an issue of getting new technology in there to increase the prospects over the long-term growth. it will take a couple of years for them to get this investment in and to actually get it into those fields. they will also be facing issues including coming into elections. there will be some other
uncertainties around legislation. the signing of this final contract today -- the iranians hope will give them additional certainty to outside investors. to paulo, thank you so much for that. presidentand fed wanted a rate hike at the last policy meeting but lost that along with a few other dissenters. takes a closer peek and makes a case for action in november despite the presidential election. >> i thought that the case was compelling to take another step on the gradual path. as we data had come in anticipate and is consistent with my forecast, i would expect that the case would remain compelling. we are going to look at all of
the data that comes in between now and november and between november and december as we do all of the time. we like to look at all of the incoming information. if the dataright -- comes in consistent with what we are seeing, i would think that it would still be a compelling case. >> you would vote for a rate hike? >> we will see but i think it will still be compelling. >> it is a few days before the election, i have seen moves right before elections. it would raise a lot of tension. the markets would notice. are the rules for a rate hike in november any different? does the hurdle get any higher? we are an apolitical institution and we have been all along. we are designed to have an independent monetary policy. i have been going to fmoc meetings for 16 years.
i have been in the fed for 30 years. we are an apolitical institution. politics do not come into our decisions. we look at the economy and we either are you wait -- we evaluate it. >> do you think the other members will vote for a hike even six days prior to the election? >> politics will not come into it. ideach member gives their based on their view of the economy. hikes in 2017, is that realistic or does the fmo risk under delivering again? >> it is not a promise. >> i used the wrong word. >> we sit down and we each express what we think the
appropriate path for the policy should be. committed to hitting our goals and moving the economy in that direction. and then we write down what we think the appropriate policy cap should be. if the economy either value week differently, that path will be moving around. youssef: she spoke exclusively to kathleen hays on bloomberg tv and radio. staying with the story in new york, the fed president bill dudley is advising caution over a hike. speaking at a seminar hosted by his own bank he said the fed was limited in its ability to respond to any potential recession with darwin costs so close to zero calling the economy's expansion tepid. he says the lackluster performance reflects the fed's inability to stimulate growth.
angie: welcome back. you are watching bloomberg. i am angie lau in hong kong. youssef: i am in dubai. a quick check of the latest business flash headlines. a state of emergency in turkey has been extended another three months after the president said even a year would not be enough to clear up after july's failed coup. the government has fired about 100,000 people from government and military posts accusing them of supporting the alleged mastermind. weakened on the
news. has won financial help from germany. a million of that will be a soft load with the rest in the form of a grant. the announcement came from the petra news agency. it will support education, water and help provide for one and half million refugees. youssef: libya's oil production hit a half million barrels a day and will advance further with opec. the national oil corporation expects production to reach 600,000 barrels a day by the end of october. libya, nigeria, and i ran say they will not have to cut and iraq says it does not accept opec's estimates of its output. angie: our next guest says
quotas and compliance will be the next key issue for opec's meeting in november after its surprise agreement to cap output. do you believe this? thet is a surprise to market and the proof will be in what they deliver. is notck record for opec good when it comes to production cuts. when we have seen these a haveements in the past failed to deliver the kinds of cuts they promised. the odds are against this. atie: if you take a look saudi equities right now, at a seven-year low, it is reflective of the markets not believing it or that saudi arabia has to take the brunt of the cuts. will be the biggest member of opec to cut and will make the bulk of the cuts. this helps put a floor in prices but it does not do anything to
lift long-term expectations of price. it is down to how competitive shale will be and where demand is going. we're getting some breaking news. to keep power grids division. it is think it will buy back $3 billion in shares also raising its margin target quarte -- corridor to 15%. we will keep you posted. to get back to the oil conversation, what is the role of non-opec supply point to be in this equation? that has been resilient. sovietis pumping at post record highs. u.s. crude production is still showing strength. is that going to derail opec's plans to take back the oil market? >> this is the key question.
does is bringcard the market back into balance by the end of the year. we basically bring forward the rebalancing of the market. as we get into 2017, we get another 1.2 billion barrels in demand growth. the real question is what is the price needed to stimulate non-opec supply to meet that demand growth needs. that is the key question everyone is trying to answer. $60 a barrels near or a little higher. it we willow much see in incased competitiveness in terms of non-opec supply especially shale. youssef: what is your outlook for oil prices run this point onward --from this point onward? >> it puts a floor in oil prices
from here and it will be trading around $50 a barrel up until the opec meeting at the end of november. the big question in the near term is whether or not opec can agree the allocation of cuts between the members. we think they will. that would lay the groundwork in the move to the increase prices per barrel in 2017. angie: does that include compliance -- i am sorry that we ran out of time. analyst atand gas stanford. we're going to take a look at the social media reaction to the titan's latest headlines. this is bloomberg. ♪
you are watching bloomberg. i'm in dubai. angie: i am angie lau in hong kong. donald trump's taxes remain in the election spotlight after the new york times reported that he has not paid federal income taxes for years. juliet is following the story. she gasped he has declared this a brilliant move. juliette: donald trump has used this to his advantage. he was speaking at a rally in , colorado. he says he is one of the only people that understand the complex u.s. tax system and he used it brilliantly for himself. it seemed his supporters agreed. let us listen to what he said. and realbusinessman estate developer, i have legally used the tax laws to my benefit. and to the benefit of my company. my investors and to my employees.
brilliantlyhave used those laws. brilliantly used a tax system to his advantage. some of his supporters really believe in donald trump's statements. -- don'tiani saying you think a man that has this economic genius is a lot better than a woman and the only thing she has ever produced is a lot of work for the fbi checking out her e-mails. of the speech is that america needs a comeback. he is saying that he is the only one that can reform this. complex tax system. youssef: what has hillary clinton had to say about this? juliette: not surprisingly, she does not agree and she tweeted vehemently against rudy giuliani's claims that donald trump is a genius. saying -- what kind of a genius
loses $1 billion in a year? -- thengrich said clintons cannot talk because they also have a tax deductible foundation and they have flown planes around the world paid for by taxpayers and they should worry about themselves. and an actor said that a lot of people have said that the immigrants donald trump wants to get out of the u.s. are probably paying more in taxes than he does. youssef: thank you. staying with the u.s. politics. attention turns to the vice presidential race this week. tim kaine and governor mike pence will face off in the first and only debate in st. louis. bloomberg special coverage begins at 8:30 p.m. in new york. that will be on wednesday in hong kong. that is it for this edition of bloomberg markets, middle east. anna edwards and manus
anna: ripe for a rate hike. the december meeting. they still could make a decision despite being so close to the u.s. election. reboundingon hold as commodity prices boost the australian economy. bad news for banks. figures in theresa may's government says that she will not prioritize protecting financial companies in her brexit negotiation. ♪